Over the last few months, a number of fiber optics companies have turned their attention to a growing new market – Internet data centers. A few years ago, few people would have expected this industry would have any interest in building commercial data centers.
However, Meta Marshall, an analyst for Morgan Stanley, told Investor’s Business Daily that the groups are paying more attention to this market every month.
"The data center interconnect market is one of the fastest growing markets in optical (estimated to be growing 30%-plus for next 4 years), drawing a lot of focus from nearly every optical vendor at OFC," Marshall stated.
Their investment in new data center solutions can be invaluable for newly established brands. Many startups can’t trust their data to third-party cloud providers, but must also prioritize speed. Therefore, neither traditional data centers nor cloud based servers are adequate solutions.
“Start-ups prefer cost effective and customizable solutions according to their business requirements,” said Sushil Deshmukh, a business consultant that graduated from the London School of Business and Finance.
Newer data centers will rely primarily on fiber optics, which will be a perfect compromise for many new startups. They are already available in smaller countries offers fiber optics based broadband services.

How Startups Will Benefit from Fiber Optics Based Data Centers

Meeting data storage needs is one of the biggest concerns startups face. Many startups store their data in the cloud, but this has created a variety of issues that need to be addressed.
The biggest concern is that cloud-based servers tend to have inadequate security. Relying on cloud hosting can also be a regulatory nightmare, especially for brands subject to HIPAA and financial regulations.
According to a report from MarketsandMarkets, regulatory compliance has been an ongoing problem for healthcare companies using cloud storage.
“Although the study comes out of a small sample size, providers should note these concerns as the results are similar to the much larger cloud adoption study by Skyhigh. Security was cited as the top issue in both studies. This concern is certainly valid since healthcare is more vulnerable to security breaches than other companies… Better regulatory compliance was only experienced by a quarter of the healthcare organizations surveyed.”
Lack of standardization is another issue.
While cloud computing can be great for many reasons, traditional data centers are better for many reasons. The company has full control of the data, so it doesn’t have to worry about a third party provider instituting the right security measures or turning data over to other parties at their discretion.
However, traditional data centers have not proven to be practical for most startups. Fiber optics based data centers can transmit data more quickly and tend to be more cost effective. In 2012, Dennis Martin, founder and president of Demartek LLC says they will transform the data storage industry in the next few years.
"You have to think ahead. As we move forward in speed, you're going to see more interest in fiber optic cabling and less in copper because copper can't push the signal very far,” Martin told TechTarget.
However, fiber optics providers have been slow to develop the technology emerging brands depend on. Marshall and other industry experts believe this will change in the near future.
Fiber optics manufacturers from all over the world are developing the broadband solutions that will power the new generation of data centers. Many of these manufacturers are based in China and other Asian countries.
"Conversations with several component vendors suggest Chinese broadband tenders are 'likely to be awarded in the next several weeks,' which would contribute to strong demand in the back half of this calendar year," states Dmitry Netis, an analyst for William Blair.